Wisconsin gets extra $936 M from federal agency run by ex-governor

MARK SHERMANAssociated Press Writer

Published Wednesday, March 17, 2004

WASHINGTON -- Congressional investigators said Tuesday that Wisconsin is receiving $936 million more in federal Medicaid payments than it should under an arrangement with the Health and Human Services Department, run by former Wisconsin Gov. Tommy Thompson.

The Centers for Medicare and Medicaid Services, a division of HHS, incorrectly gave the state eight years -- instead of 16 months -- to wean itself from extra Medicaid payments that the government has decided are unjustified, the General Accounting Office said in a new report.

The Medicaid agency initially granted Wisconsin 16 months in September 2001, but extended the transition to eight years in February 2002, an action GAO termed "particularly troublesome."

Wisconsin never should have been approved to receive the payments at all, GAO has previously said. The state received $405 million in the first 16 months of the transition and is scheduled to receive $936 million before the payments end in 2009.

Thompson does not take part in any matters involving Wisconsin, spokesman Kevin Keane said. But Sens. Charles Grassley, R-Iowa, and Max Baucus, D-Mont., have questioned whether other former state officials who followed Thompson to HHS gave Wisconsin special treatment.

Grassley said Tuesday that the government's rules for the Medicaid program "need to be applied consistently."

Dennis Smith, the acting CMS administrator, said Wisconsin was shown no favorable treatment. "We applied the criteria equally to everyone," Smith said in an interview.

GAO also said Nebraska was improperly given eight years instead of five, a difference of $102 million.

The extra payments result from an accounting gimmick. States were pretending to spend billions of dollars for Medicaid to draw down inflated matching money from Washington. In most cases, the extra money ended in the state coffers, available for just about anything.

Some states have been using the financing mechanism since the early 1990s, but near the end of the decade, word spread and more than half the states were participating.

Specifically, the loophole is being phased out over eight years for the states that began using it before October 1992, with the reasoning that they have become most dependent on the extra money. States that began between Oct. 1, 1992, and Oct. 1, 1999, have a five-year phaseout. The most recent additions have from one to two years.

Wisconsin and CMS said the state had been using the financing mechanism, known as the upper payment limit, since 1985 for Medicaid payments to some county-run nursing homes.

GAO disagreed, saying Wisconsin's financing scheme was not established until 2001 -- after the federal government announced it would close the loophole. GAO said the supplemental Medicaid payments to Wisconsin before then were relatively small and different in character from the questionable payments.